Sorry I broke the country

Tomorrow's conversation, tonight. Know where the news is going next.

Oct 18, 2022 View in browser   By Ella Creamer With help from Joanne Kenen Britain's Prime Minister Liz Truss attends a press conference. | Daniel Leal/Pool Photo via AP, File PANNED AND SEARED — Not long into her tenure, British Prime Minister Liz Truss' chancellor, Kwasi Kwarteng, unveiled a catalog of unfunded tax cuts — the largest in 50 years — as part of a "Growth Plan." Markets recoiled. The pound hemorrhaged value, almost reaching a historic parity with the dollar. Government borrowing costs spiked along with mortgage rates. The IMF stepped in to issue a sharp warning that the proposals in the so-called mini-budget would exacerbate the U.K.'s cost-of-living crisis. Prominent critics came out of the woodwork. Even President Joe Biden, holding a chocolate chip waffle cone in an Oregon Baskin Robbins, said that Truss made a "mistake," and the consequences were "predictable." On Friday, Truss fired Kwarteng, subbing in Jeremy Hunt — who went ahead and tore up most of what remained of Truss' mini-budget on Monday. While markets are responding positively to the reversal in policy, Truss' reputation remains in shreds. Tory MPs have publicly called upon her to resign, and many more are understood to have submitted letters of no confidence. Latest YouGov polling shows Truss' net approval at -70 — the lowest in history, 17 percentage points below her disgraced predecessor Boris Johnson's worst score and almost as low as the rating for Russian President Vladimir Putin. The mini-budget fiasco may or may not prove fatal to Truss, but the damage to the Conservative Party is wide and deep. "The government has completely lost its credibility on its ability to manage the economy and to be seen as a solid custodian of people's money," said Mark Leonard, director of the European Council on Foreign Relations. The public won't forgive quickly, Leonard added, citing the plummeting popularity the Tories suffered after Black Wednesday, when a 1992 collapse of the pound forced Britain to withdraw from the European Exchange Rate Mechanism. "A cliche is that the Tory Party's purpose is to be economically competent. If it loses that, people start to ask, 'What's the point in the Conservative Party?'" said Garvan Walshe, former national and international security policy adviser for the Conservatives. Indeed, a recent poll-of-polls predicted that Labour would seize a landslide 507 seats if a general election were held today, and the Tories would fall behind the SNP to third place, with 48 seats. In an interview Monday, Truss apologized for "mistakes" made, claiming that she had "fixed" them. She also vowed to "lead the Conservatives into the next general election," scheduled for January 2025 at the latest. Beyond the domestic calamity, the Conservatives face an uphill battle convincing the rest of the world that the U.K. is a country to be taken seriously. The mini-budget drama has been "extremely damaging to British reputation abroad," Leonard said. Global expectations are that U.K. macroeconomic policymaking should be at least somewhat consistent and professional — yet Truss' policy circus and the monthslong merry-go-round of job-hopping Tories smacks of a government losing control. Aside from Biden's comments in the ice cream parlor, other leaders have weighed in, some tongue-in-cheek: The Greek Prime Minister, Kyriakos Mitsotakis, told the Sunday Times: "If you need experience in dealing with the IMF, we are here to help!" The Egyptian delegation at a D.C. IMF meeting reportedly joked that their pound had brighter prospects than the British counterpart. But behind every joke there is some truth; mini-budget fallout has "created a sense in many international debates that Britain is now like an emerging economy," Leonard added. The recent fiasco is compounded by previous knocks to the U.K.'s global credibility — notably, Brexit. "Truss and her team hadn't really understood how Britain's international reputation had already been damaged by Brexit," said Walshe. While the Conservatives may have been able to get away with the raft of tax cuts pre-Brexit, the U.K. is now "associated with a more unreliable type of political economy," he added. Biden, in particular, has been trying to move away from the sort of Reaganite economics reflected in the "Trussonomics" mini-budget, said Leonard. In this way, the plan's utter failure should reassure America that trickle-down policies are a no-go in the current economic climate. Whether Truss is ousted or not, the Conservatives face a reputation struggle domestically and globally. Rebuilding trust begins at home: By and large, governments that "have strong support from the population have more credibility on the international stage," said Leonard. Projecting "stability and policy continuity," said Walshe, will also be important. Yet that is unachievable as long as the domestic situation remains volatile. Probabilities based on Betfair Exchange wagers give a 1-in-3 chance that Truss will stay in Downing Street for the remainder of the year. Just six weeks into her premiership, she has managed to become the least popular prime minister in recent history. In aiming at " Britannia Unchained ," the U.K.'s prime minister has done nothing less than forge her own cage. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight's author on Twitter at @ella_louise_c .   NEW AND IMPROVED POLITICO APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. With a fresh look and improved features, the sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don't miss out on the app you can rely on for the news you need, reimagined. Already a POLITICO app user? Upgrade today! DOWNLOAD FOR iOS  – DOWNLOAD FOR ANDROID .     From the Health Desk Former President Barack Obama, former first lady Michelle Obama, President Joe Biden and first lady Jill Biden. | Kevin Dietsch/Getty Images CLOSING LOOPHOLES — Back in 2020, Biden beat competitors for the Democratic nomination by promising to take a step-by-step approach to improving the Affordable Care Act, rather than scrapping it for Medicare for All. Despite skepticism, Biden has expanded eligibility and subsidies for what you might call "Obamacare-For-All-Who-Need-It." The administration took another step a few days ago, closing the so-called Family Glitch . It didn't get a lot of attention given the flood of news, but it's a significant change to the 2010 health law, emails Joanne Kenen , now the Commonwealth Fund Journalist in Residence at Johns Hopkins Bloomberg School of Public Health. The "Family Glitch" never made a whole lot of sense — except that without it, Obamacare would have been even more expensive and therefore even harder to pass back in 2009-2010. The ACA required most businesses to give their workers an affordable option (about 9.5 percent of income). But they didn't have to make it affordable for workers' spouses/partners and kids. And the dependents couldn't go on the Obamacare exchanges and get federal subsidies as long as they had an option — even an unaffordable one — through a family member's employer. The Biden administration closed the "glitch" via an executive rule. (Presumably someone will try to challenge it in court, but as of this writing, we're not aware of a case.) So if Ms. Smith has good coverage at work but Mr. Smith and the little Smiths do not, they can now get an ACA-subsidized plan. Around 5 million people fell in the glitch, but many found other coverage, sometimes through the second person's job. The administration anticipates about a million of them will get covered (or get covered more affordably) through the ACA in 2023. Open enrollment starts Nov. 1. This basically means that Biden is getting closer and closer to universal coverage — except for several million low-income people who live in mostly southern states that still refuse to expand Medicaid, a dilemma the Democrats had hoped to address in their doomed Build Back Better legislation. But the ACA changes that did get enacted have improved coverage; Biden noted the other day that the uninsured rate for Americans is at a record-low 8 percent. The challenge from here — for both individuals and the government — remains cost and affordability of care, which generally remains the most expensive — but not the best — in the world.   LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today .     Poll Watcher 28 percent The percentage of New York likely voters who believe that crime is the most urgent issue facing the state, according to a new Quinnipiac University poll . That's the highest percentage of any issue; inflation had the second-highest number at 20 percent. Republican gubernatorial candidate Lee Zeldin has made crime the centerpiece of his agenda; the Quinnipiac poll has Zeldin polling at 46 percent compared with Democratic Gov. Kathy Hochul's 50 percent in the deep-blue state. Only 6 percent of respondents to the poll said that abortion — which Hochul has cut the most ads about — was the most pressing issue. What'd I Miss? — Biden pledges to sign abortion rights into law if Dems hold Congress: Biden today promised that the first bill he'll send to the next Congress will be legislation to reinstate the abortion protections of Roe v. Wade . "Your right to choose rests with you, and if you do your part and vote, Democratic leaders of Congress, I promise you, will do our part. I will do my part," he said. Biden acknowledged that his plans are contingent on Democrats holding the House and increasing their majority in the Senate. As such, his new vow appears aimed squarely at energizing Democrats to turn out in force in the upcoming midterm elections. — Oz closing in on Fetterman in Pennsylvania Senate race: Republican Mehmet Oz has narrowed Democrat John Fetterman's lead in Pennsylvania's bare-knuckle Senate election, and the two candidates are now polling inside the margin of error, according to a new survey shared exclusively with POLITICO. Fetterman is slightly ahead with 48 percent of likely voters, while Oz has 46 percent, the poll by AARP found. That's a shift in Oz's direction since June, when Fetterman, the state's lieutenant governor, was leading by six percentage points in the AARP survey. — Biden administration to tap oil reserve again ahead of midterms: The Biden administration plans to announce a release of oil from the Strategic Petroleum Reserve in a bid to drive fuel prices down, two sources familiar with the plans said. The White House will release 10 million to 15 million barrels from the reserve as part of an existing plan, announced in March, to release 180 million barrels of crude oil into the market throughout the year, according to two industry people granted anonymity to discuss confidential discussions with the administration. — Inflation silver lining: Tax changes could fatten paychecks: Millions of Americans could see a bump in their paychecks next year thanks to new inflation adjustments to the tax code. Because of soaring prices, the size of the standard deduction will jump 7 percent next year to $27,700, the IRS announced today. The maximum amount people can put in health care flexible savings accounts will climb to $3,050 from $2,850. And though the agency cannot change income tax rates, the earnings threshold at which they begin will go up. AROUND THE WORLD Members of the Tigrayan community protest against the conflict between Ethiopia and Tigray rebels in Ethiopia's Tigray region, outside the the United Arab Emirates embassy in Pretoria, South Africa on Oct. 12. | AP Photo/Themba Hadebe WAR AND PEACE TALKS — The Ethiopian government says it has taken back control of three towns in the northern region of Tigray, according to The Associated Press. Since August, there has been a resurgence in fighting between the Tigray People's Liberation Front and the Ethiopian government. The conflict began in November 2020, and a cease-fire had been in place since March. And now, Ethiopian government authorities are saying that they are determined to retake immediate control of airports and other essential infrastructure in Tigray. Shire, a major town in the northwest of Tigray, was captured by Ethiopian forces on Monday. According to a statement from the Ethiopian government, the offensive was completed "without fighting in urban areas," adding that authorities will coordinate with humanitarian groups in the areas that have come under the control of Ethiopian forces. Tigrayans around the world have protested conflict in the area. Ethiopia is under pressure to begin the peace talks that were set to kick off this month in South Africa. They were delayed because of logistical issues. Nightly Number 30 percent The percentage of power stations in Ukraine that Russia has destroyed in the last week, according to Ukrainian President Volodymyr Zelenskyy. The destruction has led to "massive blackouts" around the country. Radar Sweep PROPHET OF DOOM — David Sacks, PayPal's founding chief operating officer, might not be a household name like Elon Musk. But he's become increasingly popular across conservative media . He's also become a significant Musk backer and a leader in the space of a new conservative movement that's both isolationist and nationalist, worried about the deep state and angry about the swamp. Read Jacob Silverman 's deep dive into Sacks and his world in The New Republic. Parting Words TikTok has ballooned in popularity around the world. | Sean Gallup/Getty Images SCROLL HOLE — TikTok has recently conquered the internet. The app now gets more visits than Google. Its average American viewer logs on for 80 minutes a day. And two-thirds of our teens use it. Once considered a delightful boon that entertained and diverted, the time-wasting app has recently followed the path of other new media sensations to become regarded as a bane. A cultural sensation of the 2020s, TikTok has also become the internet's whipping boy, shamed by governments and advocates more often these days than even Facebook. Jack Shafer argues that it doesn't deserve all of the hate. That it's a new form of media going through a period that many others have over the course of history — from radio to television to other social media. Is our fixation on TikTok overblown ? Did someone forward this email to you?  Sign up here .   Follow us on Twitter Charlie Mahtesian @PoliticoCharlie Calder McHugh @calder_mchugh Naomi Andu @naomiandu   Follow us

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings This email was sent to rouf@idiot.cloudns.cc by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA Please click here and follow the steps to unsubscribe.